A FWIW Update To: For Those Wondering What I’m Thinking

There’s an old saying or thought, and it goes something like this (although I’ve added my own spin too it:)

“If you want to instill an aire of genius about you; make bold statements, with conviction, in public. However, if you don’t want to be proven a fool – never write those thoughts down where someone can compare the results later on. Unless you’re an economist – then you just boldly make another prediction.”

The other day I made a case (or argument) about where I consider the “markets” to be at this point in time. It seemed no sooner than I posted the article that the markets took off higher in a manner that would make Speedy Gonzales of cartoon fame blush. And much like Speedy – they’ve never looked back. And, as far as my thoughts on Verizon™, Yahoo™? Let’s just say a Verizon walkout happening at the same time didn’t play in my favor of some “guru insight.” That said, I am still of that same opinion as to the premise, regardless of the final result with Yahoo.

I was just reminded of all this over lunch which I had with a friend, where I was asked (in a tone that seemed to cause them great humor) “So……How are the markets doing today?”

It was a fair question. And I thought I’d share (because these types of posts seem quite popular with readers) for those who may also be “wondering” since it would seem by all accounts “genius” is not a term one would associate with my latest thoughts. So, with that said, here’s how I responded. Take it however you like. And yes, even if you consider it humorous. For I understand – if you’re going to make bold calls and want it to be on record, genius and fool walk hand in hand. It comes with the territory. Yet, let me also express – I haven’t changed my mind. (As usual I’ve typed this in conversation format) To wit:

Me: “Obviously you read my latest post, right?” (response was an understated snicker, then a yes, just to give an overview on how this conversation started)

Again, Me: “Well, basically everything I stated I still stand behind. As far as the markets roaring higher there’s a myriad of reasons for it if you understand technical analysis and other market drivers such as HFT and the like.

What it also shows you (an opinion of course) is just how important that area I marked truly is to the “markets.” It would seem both “heaven-and-earth” are being deployed as to make sure that area is not breached. It would also appear that, once again, this move is being fueled by short covering – not new “bulls” buying in. And that should concern you.

There are reports of both market data, as well as, others that show over the last few weeks during this market rise since February or so, the vast majority of Sellers vs Buyers has been to the Sell side. Not Buy side. That also should be a real reason for concern. Like I said – If it falls apart, it will fall apart hard because, there’s no commitment as in buyers. It’s all short covering, light volume’d, algo spoofing-styled market action. In other words: “There’s no there – there.”

There’s another glaring issue. Did you happen to read the latest retail sales report today? (response: Not yet. Why?)

Me: Well it would seem they aren’t as good as one would think you would need to have for a market to be at these types of levels. After all, we are within spitting distance of the highest levels ever made in human history. Can you see the issue here? And that’s not all. First quarter GDP business inventories to sales figures are very concerning. But, (and it’s a very big but) there’s something to my way of thinking that’s even far more troubling.

The New York Fed. now wants to put out a “new and improved” model or version of GDP forecasting to offset the dower assumptions or predictions currently made from the Atlanta Fed. report. Which by the way, although dower, it has been more consistent, as too accurate, than most of the others. Funny huh? Suddenly now we need another so we can show more “hope and faith” in Fed. forecasting. Like I said, if you’re an economist and you’re wrong – just make another prediction. And if it’s to be on the record – if in doubt – just create another forecasting device or report altogether.

Remember how ADP™ employment and BLS figures contradicted each other back a few years ago? Then they adjusted ADP’s model (which was shown to be the more accurate) to the more flawed model of BLS (i.e., introducing more of the “seasonality styled adjustments and more) as to make them more in sync? Bam! Problems solved. Know what I mean? But everyone forgets those things, which is the intent, if time prevails. (here is where I got to snicker a little)

Again, Me: So, with that all said I just have one question: Are the markets at these heights, and worthy of staying here, (let alone continuing higher) based on fundamental business practices and/or accounting as you know or assume them to be? Or, are we at these lofty height for the sheer “Atlas” styled monetary policy creation being held up by the will and wisdom of a “diminutive woman” (that’s a direct quote and description used by former Dallas Fed. president Richard Fisher) that has done nothing other than spent her life residing within the halls of academia and government?

Again, no matter how much higher the “market” goes, I’m of the same opinion still. However, with one caveat:

With every tick higher my concern increases for an even more violent downturn. For just like a house of cards, there comes a point where that next level, is the level, that can bring it all down quickly. Other than that – I have no strong feelings on the matter. How’s your steak?”

On an aside note since I’m typing this shortly after the latest release of the Fed’s FOMC Beige Book. There’s more to this whole rebound in the markets that’s making it quite hard to “square-some-circles.” For instance: How is it that the latest retail sales reports shows troubling data, yet, the Fed’s report shows “improvement across all 12 districts?” Or, another which is far more confusing (paraphrasing): “Oil’s price decrease continues to help bolster or offset costs helping to boost economic activity.” All this while oil prices since that last meeting is now on a tear not seen since the downturn in 2015, which creates its own double-edged paradox: Does higher oil prices now mean stocks are going to be worth more because people will have less “in their pockets” as the saying goes? All while “highly accommodating monetary policy” is still required as the stock market is once again at the highest levels known to mankind?

Or maybe I should just end here with the immortal words of that genius Alfred E. Neuman:

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